Over two days, VW shares fell 31 percent, wiping out more than $26 billion (24 billion euros) of the company’s market value. The fall comes on top of Monday’s 17 percent decline.
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The shockwaves from the scandal enveloping Volkswagen were being felt far and wide across the sector as traders wondered who else may get embroiled. Daimler, the maker of Mercedes-Benz, was down 4.6% on Tuesday, while BMW lost 5.2%. France’s Renault SA was 7.1 percent lower.
The scandal is hugely damaging to a business that relies heavily on a hard-won reputation for quality and trustworthiness.
“Millions of people all over the world trust our brands, our cars and our technology”.
“It’s not just a US matter for VW – you have regulators all over the globe looking into it with potentially numerous fines to come”, said Vincenzo Longo, a strategist for IG Group in Milan.
The company then admitted that it intentionally installed software programmed to switch engines to a cleaner mode during official emissions testing. The software device then turns off the emissions controls during normal driving situations, allowing the cars to emit more than the legal limit of pollutants.
On Monday night, Volkswagen’s U.S. President and CEO, Michael Horn, told a New York audience “we have totally screwed up”.
The issue exists with VW’s Type EA189 engines, which have been fitted to 11 million vehicles globally, and Germany’s EPA equivalent, the Federal Motor Transport Authority (Kraftfahrtbundesamt, or KBA), has started its own investigation into TDI emission levels.
Volkswagen said in a statement that it is “working intensely to eliminate these deviations through technical measures”.
The company was ordered to recall 482,000 cars and told it could face financial penalties totalling more than $18bn in the USA alone.
It said VW might need up to carry out the recall.
Loughran said. “And, I’m thinking Tesla”.
But Mike Hawes, chief executive of the SMMT, said it was probably a one-off case. It gave no information on its content.
The costs, VW conceded, may be subject to revaluation in the light of ongoing investigations. It didn’t specify by how much. However, for the majority of these engines, it said the software “does not have any effect”.
The auto maker has stopped all sales of its diesel vehicles in the United States amid an investigation into software that has enabled thousands of cars to cheat emissions tests.
Tetzlaff said almost all of the company’s Volkswagen-branded diesel cars are included in the stop sale order in Canada, including the Jetta, the Golf and the Beetle.
“I love the horsepower and the torque of a diesel”, he said.
VW boss Martin Winterkorn said he was “endlessly sorry” over the scandal which has prompted questions about his future. Any recommendation that committee makes will be presented to the full 20-member VW board due to meet at a later date. Yet speaking on Germany’s Deutschlandfunk radio, Olaf Lies cautioned against “over-hasty calls for resignations”.
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Volkswagen AG’s smog-test troubles escalated Tuesday as the company acknowledged putting stealth software in millions of vehicles worldwide.
